Japanese Government Bonds slip, yield curve steepens after 40-year sale

Japanese Government Bonds slip, yield curve steepens after 40-year sale

Japanese government bonds slipped on Thursday, with the yield curve steepening as superlong bonds sold off after an uninspiring 40-year auction. The 10-year cash JGB yield added half a basis point to 0.050 percent, while 10-year JGB futures edged up 0.02 point to finish at 150.56.

The Ministry of Finance offered 500 billion yen (.47 billion) of 40-year JGBs with a 0.9 percent coupon, up from 0.4 percent at the previous sale to reflect market levels.

Japanese government bonds slipped on Thursday, with the yield curve steepening as superlong bonds sold off after an uninspiring 40-year auction. The 10-year cash JGB yield added half a basis point to 0.050 percent, while 10-year JGB futures edged up 0.02 point to finish at 150.56. The 30-year JGB yield and the 40-year yield rose 1.5 basis points each, to 0.815 percent and 1.035 percent, respectively.

The Ministry of Finance offered 500 billion yen ($4.47 billion) of 40-year JGBs with a 0.9 percent coupon, up from 0.4 percent at the previous sale to reflect market levels. It produced a highest yield of 0.9650 percent.

The sale drew bids of 2.87 times the amount offered, down from the previous sale’s bid-to-cover ratio of 2.95 times, indicating somewhat weaker demand for the bonds.

BOJ board member Makoto Sakurai, among the strongest proponents of aggressive monetary easing on the central bank’s policy board, on Thursday ruled out the chance of any imminent hike in its bond yield target, stressing the need to maintain its massive stimulus programme to prop up inflation and fend off overseas economic risks.